Second Quarter Results:
For the three months ended December 31, 2008, the net loss for second quarter of 2008 included a non-cash impairment loss of $520,000, or $0.16 per diluted share, for the write-off of some fixed assets located in the company’s Suzhou and Shanghai, China facilities. For the three months ended December 31, 2007, net income included an impairment loss of $16, 000 related to the disposal of certain fixed assets in Suzhou and Malaysia.
Excluding the non-cash impairment expense for the write-off of some of our Suzhou and Shanghai assets, Trio-Tech’s operating profitability would have improved in the second quarter compared to the first quarter of fiscal 2009. Given the historically weak conditions we face in the global semiconductor and electronics industries, we believe that this is a creditable performance. We remain focused on winning as much business as we can in this difficult environment, while keeping our costs down, conserving our cash, and protecting our outstanding balance sheet, stated chief executive officer S.W. Yong.
We lowered costs further in the second quarter by consolidating all of our manufacturing and test and burn-in operations into our Singapore and Malaysia facilities, reducing headcount and executive salaries. As a result of these efforts, general and administrative expenses decreased significantly compared to the same quarter last year.
On January 8, 2009, the company agreed to purchase for about $3 608, 000 the property it previously leased for its testing operations in Malaysia. The company made a down payment of about $361,000, and expects to finance the balance of the purchase price using the proceeds of a bank loan of about $2,790,000 and internally generated funds.
Revenue from the company’s products sales for the second quarter of fiscal 2009 decreased to $2,834,000 compared to $7,201,000 for the second quarter of fiscal 2008. Gross margin increased to 21.3% from 17.5%, reflecting an improved product mix and reduced employee expenses.
Revenue from testing services for the second quarter of fiscal 2009 decreased to $2,728,000 compared to $5,670,000 for the same quarter last year. Gross margin in testing decreased to 26.3% from 34.1% a year earlier, due to lower volume and prices and excess capacity associated, in part, with the Singapore and China facilities.
General and administrative expenses for this year’s second quarter decreased by $1,065,000, compared to the second quarter of fiscal 2008. This reflects cost cutting efforts to reduce personnel and payroll expenses, reductions in officer and executive compensation, and, due to employee count reductions, a reversal of $159,000 related to bonuses and annual leave provisions.
At December 31, 2008, cash and cash equivalents were $12,294,000 ($3.81 per outstanding share), working capital was $13,214,000, and shareholders’ equity was $20,596,000 ($6.38 per outstanding share).
Six Months Results:
Total revenue for the six months ended December 31, 2008, was $11,792 000 compared to $24,921,000 for the first six months of fiscal 2008. The net loss for this year’s first half was $1,145,000, or $0.35 per share. This compares to net income for the first half of fiscal 2008 of $916 000, or $0.28 per diluted share. Overall gross margin for the first half of fiscal 2009 was 22.2% of sales, compared to 25.0% of sales in the first half of fiscal 2008.
Revenue from the company’s product sales for the first half of fiscal 2009 decreased to $5,966,000 compared to $13,708,000 for the first half of fiscal 2008. Gross margin improved to 17.9%, compared to 16.3% for the first half of fiscal 2008, reflecting an improved product mix and reductions in employee expenses.
Testing segment revenue for the first half of fiscal 2009 decreased to $5,826, 000 compared to $11,213,000 for the first six months of fiscal 2008. Gross margin on testing sales decreased to 26.7% from 35.6%, reflecting lower volume and absorption of fixed capacity.
General and administrative expenses for the first six months of fiscal 2009 decreased by $670,000 compared to the first half of fiscal 2008, reflecting continuing efforts to reduce personnel and overhead expenses.
